Improved performance was in line with expectations. 2024Q1 revenue and profit both increased, maintaining a “buy” rating
In 2023, the company achieved operating income of 750 million yuan (+20.2% year-on-year, same below), net profit of 160 million yuan (+15.7%), net profit of non-return to mother of 136 million yuan (+47.0%); 2024Q1 achieved operating income of 190 million yuan (+11.9%), net profit to mother of 40 million yuan (+20.4%), and net profit of non-return to mother of 0.3 billion yuan (+15.0%).
Considering the uncertainty of future industry competition, we lowered 2024-2025 and added a profit forecast for 2026. We expect net profit for 2024-2026 to be 2.01/2.43/289 million yuan (the original value for 2024/2025 was 2.13/264 million yuan), corresponding EPS was 1.00/1.21/1.44 yuan, and the current stock price corresponds to PE27.1/22.4/18.8 times PE. We are optimistic that the “1+3” large single product strategy will drive the company's revenue performance to continue to increase steadily and maintain “buying” ratings.
Profitability: Significant improvement in gross margin and acceleration of expenditure
In terms of gross margin, the company's overall gross margin in 2023 was 57.6% (+3.6pct). In terms of cost ratio, the cost ratio for the period was 33.9% (+3.2pct), of which the sales/management/ R&D/finance expenses ratio was 19.7%/10.5%/3.7%/-0.1%, respectively, +3.5/-0.7/+0.1/+0.3pct, respectively. Under the combined influence, the company's net sales interest rate in 2023 was 23.1% (-0.7pct), and 18.2% (+3.3pct) after deducting non-net interest rate. Looking at a single quarter, the company's 2024Q1 gross profit margin was 58.1% (+1.9pct); the period expense ratio was 34.7% (+4.1pct). Under the combined influence, the company's net sales margin was 23.1% (+1.1pct), after deducting the non-net interest rate of 18.1% (+0.5pct).
Revenue splitting: star products lead the way, defocus lenses continue to increase
By business, revenue from the lens/raw materials/mirror business was 595/0.90/54 million yuan, respectively, with year-on-year changes of +24.6%/+1.4%/+10.4%, respectively. Among them, the gross margin of the lens/raw materials business was 62.1%/26.4%, respectively, +2.0/+4.4pct. By product, the company's product focus strategy is remarkable. Large single products continue to lead the way. In 2023, revenue from traditional lens PMC super bright series products increased by nearly 80%, 1.71 series products increased 30%, and the revenue of the top three star products accounted for 52.3%; in terms of lenses, “Easy Control” products achieved revenue of 133 million yuan (+70%).
2024Q1 lens revenue increased 20%. Among them, PMC ultra-bright series product revenue increased 77%, 1.71 series products increased 33% year over year, anti-blue light series increased 22% year over year, and Easy Control series revenue increased by 40 million yuan (+50%).
Future outlook: Focus on the “1+3” single product strategy, and accelerate the deepening of channel construction. We are optimistic that in 2024, the company will accelerate the deepening of channels and products under the continuous improvement of its brand power, which will lead to a steady increase in revenue performance. On the brand side, in recent years, the company has continued to innovate brand marketing, expand brand volume, and successfully enter CCTV-1 “News Broadcast” and “Evening News”. In 2023, Mingyue Lens ranked first in the industry in retail sales volume, and has maintained a leading position in domestic lenses. On the channel side, in 2023, the company continued to promote school-enterprise cooperation, carry out base construction, and speed up entry into more large-scale, chain medical channels. Currently, it has established deep cooperative relationships with well-known ophthalmology institutions such as Aier Ophthalmology and Zhongshan Ophthalmology. In 2024, it is expected that the company will continue to strengthen its coverage of key markets and further expand medical channels. On the product side, in 2023, the company launched the “Easy Control” 1.56 series and 1.71 series lenses for medical channels. Currently, it has 24 models. In 2024, the company expects to continue to focus on the “1+3” product strategy for large single products, and continue to increase the promotion of “easy control” products through advertising, endorsements, and planting.
Risk warning: risk of slowing market demand, risk of fluctuating raw material prices, risk of fund-raising projects falling short of expectations